UPDATED 19:50 EDT / JUNE 16 2021

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VC and industry leaders say enterprise climate is promising for startups, but practitioner contact will be key

As veteran venture capitalists with lengthy experience working inside the technology startup community, Peter Wagner, founding partner at Wing Venture Capital, and Katie Drucker, head of business development and partnerships at Madrona Venture Group, have plenty of perspective on the ups and downs of opportunity in the tech space. Right now, the arrow is mostly pointing up.

Wing, which was formed in 2013 and was an early investor in Snowflake Inc., the largest software IPO in history, closed its third round of investment last year. Madrona raised its largest-ever fund at the end of 2020 and is known for its funding of firms in the Pacific Northwest, including unicorn-status cloud storage company Qumulo Inc.

Venture capitalists make their living by spotting technology trends early and often. Currently, that means riding a wave of digital transformation across the corporate landscape.

“I’ve never seen a more positive or fertile ground for startups,” said Wagner (pictured, right). “There’s a modernization movement in the enterprise.”

Wagner spoke with John Furrier (left), co-host of theCUBE, SiliconANGLE Media’s livestreaming studio, during the closing session of AWS Startup Showcase: The Next Big Things in AI, Security & Life Sciences. He was joined by co-host Dave Vellante and, in addition to Drucker, they also spoke with Sarbjeet Johal, a specialist in cloud leadership. The session focused on lessons learned from how enterprise buyers evaluate the value proposition of startup firms. (* Disclosure below.)

Solving pain points

Despite a favorable climate for starting a new company and gaining traction in the tech space, the challenge confronting many entrepreneurs remains positioning the value to gain wide-scale enterprise adoption.

“You have to tell a story and you have to reach the customer and speak to their need,” Drucker said. “AWS is a great example. They are famous for the concept of working backward from the customer. The customer has to understand how your offering solves their pain points.”

An integral part of this approach is the philosophy of product-led growth as a go-to-market strategy for fledgling companies. As users build value from their use of a new product, it will become woven into the fabric of day-to-day enterprise operations.

“The key is product led growth with data,” Wagner said. “You’re looking for adoption by developers or DevOps people. Now you have a ticket to the dance.”

Getting closer to hyperscalers

An example of this can be found in one of the AWS Startup Showcase companies – Coralogix Ltd. In an interview with SiliconANGLE, chief executive Ariel Assaraf described how his company created a real-time streaming analytics platform for data observability.

But the company had to overcome the roadblock of getting users to take the product for a test drive to assess its true enterprise IT value. So Coralogix created 20 different plugins to all AWS services to facilitate seamless connectivity of user data, essentially going directly to people who had never used the product before.

“The solutions have to be point solutions, and startups need to focus on the practitioners who are going to use that technology,” Johal said. “Developers are the king makers; they build the solutions. You have to go to the practitioners, solve their core problems and then expand.”

Looming on the horizon for any of today’s startup companies is the massive market influence of the hyperscalers. Some companies have built successful businesses on top of a major cloud provider’s platform, with Snowflake being one of the most notable examples.

In other cases, startups seeking to gain a presence in the edge computing space may quickly find that operating within the vast ecosystem created by large cloud providers may be the best course of action.

“Edge will be dominated by the hyperscalers because they are building metro datacenters with very low latency,” Johal noted. “My advice to startups is to be as close as you can to the hyperscalers. That’s where the spend and innovation gravity are. The key will be how you highlight yourself in the cloud marketplace.”

Watch for the complete video interview below, part of SiliconANGLE’s and theCUBE’s coverage of the AWS Startup Showcase: The Next Big Things in AI, Security & Life Sciences (* Disclosure: This event was sponsored by participating companies. Neither Amazon Web Services Inc. nor sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE

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